In late-December 2022, Fannie Mae and Freddie Mac officially announced that SOFR (Secured Overnight Financing Rate) will serve as the replacement index for their legacy LIBOR-based adjustable rate loans. A follow-up announcement was issued by each of the GSE’s on January 25, 2023, providing more clarity on the SOFR transition for legacy single-family ARM loans by including a table identifying the specific SOFR plus transition tenor spread adjustment that replaces each of the three LIBOR indices.
The final rule issued by the Federal Reserve Board in December implementing the LIBOR Act and establishing default rules for benchmark replacement in certain existing contracts that use LIBOR as a reference rate was published in the Federal Register on January 26, 2023 and will become effective 30 days later on February 27, 2023.
The transition to the replacement indices will occur on July 1, 2023, the day after the last date on which the Intercontinental Exchange, Inc. (ICE) Benchmark Administration Limited will publish a representative rate for LIBOR.
To review Fannie Mae’s announcement, please visit Fannie Mae LIBOR Transition Announcement
To review Freddie Mac’s announcement, please visit Freddie Mac LIBOR Transition Announcement
To read the Federal Reserve Board’s final rule implementing the LIBOR Act, please visit Federal Reserve Board's Final Rule Implementing the LIBOR Act
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